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Bank Act (S.C. 1991, c. 46)

Full Document:  

Act current to 2021-11-17 and last amended on 2021-06-30. Previous Versions

PART VIIOwnership (continued)

DIVISION IIOwnership of Banks (continued)

Constraints on Ownership (continued)

Marginal note:Prohibition against significant interest

  •  (1) No person who has a significant interest in any class of shares of a widely held bank with equity of twelve billion dollars or more may have a significant interest in any class of shares of a subsidiary of the widely held bank that is a bank or a bank holding company.

  • Marginal note:Exception — federal credit union

    (2) Subsection (1) does not apply in respect of a person who has a significant interest in any class of shares of a federal credit union.

  • 1991, c. 46, s. 578
  • 1997, c. 15, s. 39
  • 1999, c. 28, s. 19
  • 2001, c. 9, s. 98
  • 2007, c. 6, s. 132
  • 2010, c. 12, s. 2057
  • 2012, c. 5, s. 17

Marginal note:Prohibition against significant interest

  •  (1) No person who has a significant interest in any class of shares of a bank may have a significant interest in any class of shares of any widely held bank with equity of twelve billion dollars or more, or of any widely held bank holding company with equity of twelve billion dollars or more, that controls the bank.

  • Marginal note:Exception — federal credit union

    (2) Subsection (1) does not apply in respect of a person who has a significant interest in any class of shares of a federal credit union.

  • 2001, c. 9, s. 98
  • 2007, c. 6, s. 132
  • 2010, c. 12, s. 2058
  • 2012, c. 5, s. 18

Marginal note:Prohibition against control

  •  (1) No person shall control, within the meaning of paragraph 3(1)(d), a bank with equity of twelve billion dollars or more.

  • Marginal note:Exception — federal credit union

    (1.1) Subsection (1) does not apply in respect of a person who controls a federal credit union.

  • Marginal note:Exception

    (2) Subsection (1) does not apply if any of subsections 374(2) to (6) applies to the person in respect of the bank.

  • 1991, c. 46, s. 377
  • 2001, c. 9, s. 98
  • 2007, c. 6, s. 132
  • 2010, c. 12, s. 2059
  • 2012, c. 5, s. 19

Marginal note:Restriction on control

  •  (1) No person shall, without the approval of the Minister, acquire control, within the meaning of paragraph 3(1)(d), of a bank with equity of less than twelve billion dollars.

  • Marginal note:Exception — federal credit union

    (1.1) Subsection (1) does not apply in respect of a person who acquires control of a federal credit union.

  • Marginal note:Amalgamation, etc., constitutes acquisition

    (2) If the entity that would result from an amalgamation, a merger or a reorganization would control, within the meaning of paragraph 3(1)(d), a bank with equity of less than twelve billion dollars, the entity is deemed to be acquiring control, within the meaning of that paragraph, of the bank through an acquisition for which the approval of the Minister is required under subsection (1).

  • 2001, c. 9, s. 98
  • 2007, c. 6, s. 20
  • 2010, c. 12, s. 2060
  • 2012, c. 5, s. 20

Marginal note:Prohibition against control — federal credit union

  •  (1) No person shall, without the approval of the Minister, control, within the meaning of paragraph 3(1)(a.1) or (d), a federal credit union.

  • Marginal note:Approval

    (2) The Minister may grant the approval only if

    • (a) the control is in relation to a federal credit union that is being incorporated or a body corporate that is being continued as a federal credit union; and

    • (b) the applicant for the approval has given an undertaking under subsection 973.02(1) to cease to control the federal credit union on a date specified by the Minister.

  • 2010, c. 12, s. 2061

Marginal note:Former Schedule I banks with equity of less than five billion dollars

  •  (1) A bank that was named in Schedule I as that Schedule read immediately before October 24, 2001 and that had equity of less than five billion dollars on that day is deemed, for the purposes of sections 138, 156.09, 374, 376, 376.01, 376.1, 376.2, 377, 380 and 382, subsection 383(2), section 385 and subsection 396(2), to be a bank with equity of twelve billion dollars or more.

  • Marginal note:Application — amalgamation

    (2) If a bank to which subsection (1) applies is an applicant for letters patent of amalgamation and the letters patent are issued in respect of the application, the amalgamated bank is deemed to be a bank to which that subsection applies.

  • Marginal note:Non-application of subsection (1)

    (3) Subsection (1) ceases to apply to a bank with equity of less than twelve billion dollars if the Minister specifies that it no longer applies to the bank.

  • 1991, c. 46, s. 378
  • 2001, c. 9, s. 98
  • 2007, c. 6, s. 20
  • 2012, c. 5, s. 21

Marginal note:Prohibition

 No person may control or be a major shareholder of a bank if the person or an entity affiliated with the person

  • (a) has control of or has a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; or

  • (b) engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.

  • 1994, c. 47, s. 18
  • 2001, c. 9, s. 98

Marginal note:Prohibition

 No person who controls a bank or who is a major shareholder of a bank, and no entity affiliated with that person, may

  • (a) control or have a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; or

  • (b) engage in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.

  • 2001, c. 9, s. 98

Marginal note:Constraint on registration

 A bank must not, unless the acquisition of the share or membership share has been approved by the Minister, record in its securities register or members register, as the case may be, a transfer or issue of any share or membership share of the bank to any person or to any entity controlled by a person if

  • (a) the transfer or issue of the share or membership share would cause the person to have a significant interest in any class of shares or in membership shares of the bank; or

  • (b) the person has a significant interest in a class of shares or in membership shares of the bank and the transfer or issue of the share or membership share would increase the significant interest of the person in that class of shares or in membership shares.

  • 1991, c. 46, s. 379
  • 1997, c. 15, s. 40
  • 2001, c. 9, s. 98
  • 2010, c. 12, s. 2062

Marginal note:Exemption

  •  (1) On application by a bank, other than a bank with equity of twelve billion dollars or more, the Superintendent may exempt any class of non-voting shares of the bank the aggregate book value of which is not more than 30 per cent of the aggregate book value of all the outstanding shares of the bank from the application of sections 373 and 379.

  • Marginal note:Exception — federal credit union

    (2) Subsection (1) does not apply in respect of a federal credit union.

  • 1991, c. 46, s. 380
  • 2001, c. 9, s. 98
  • 2007, c. 6, s. 132
  • 2010, c. 12, s. 2062
  • 2012, c. 5, ss. 22, 223

Marginal note:Exemption — federal credit unions

 On application by a federal credit union, the Superintendent may exempt any class of shares of the federal credit union the aggregate book value of which is not more than 30 per cent of the aggregate book value of all the outstanding shares and membership shares of the federal credit union from the application of sections 373 and 379.

  • 2010, c. 12, s. 2062

Marginal note:Exception — small holdings

 Despite section 379, if, as a result of a transfer or issue of shares of a class of shares, or of membership shares, of a bank to a person, other than an eligible agent, the total number of shares of that class registered in the securities register of the bank, or the total number of membership shares registered in the members register of the bank, as the case may be, in the name of that person would not exceed 5,000 and would not exceed 0.1% of the outstanding shares of that class or of the outstanding membership shares, as the case may be, the bank is entitled to assume that no person is acquiring or increasing a significant interest in that class of shares or in membership shares of the bank as a result of that issue or transfer of shares or membership shares.

  • 1991, c. 46, s. 381
  • 2001, c. 9, s. 98
  • 2010, c. 12, s. 2062
  • 2012, c. 31, ss. 110, 154

Marginal note:When approval not required

  •  (1) Despite sections 373 and 379, the approval of the Minister is not required in respect of a bank with equity of less than twelve billion dollars if a person with a significant interest in a class of shares of the bank, or an entity controlled by a person with a significant interest in a class of shares of the bank, purchases or otherwise acquires shares of that class, or acquires control of any entity that holds any share of that class, and the number of shares of that class purchased or otherwise acquired, or the acquisition of control of the entity, as the case may be, would not increase the significant interest of the person in that class of shares of the bank to a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever is applicable.

  • Marginal note:Exception — federal credit union

    (1.1) Subsection (1) does not apply in respect of a person who has a significant interest in any class of shares of a federal credit union.

  • Marginal note:Percentage

    (2) Subject to subsection (3) and for the purpose of subsection (1), the percentage is 5 percentage points in excess of the significant interest of the person in that class of shares of the bank on the later of June 1, 1992 and the day of the most recent purchase or acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister.

  • Marginal note:Percentage

    (3) If a person has a significant interest in a class of shares of a bank and the person’s percentage of that class has decreased after the date of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister, the percentage for the purposes of subsection (1) is the percentage that is the lesser of

    • (a) 5 percentage points in excess of the significant interest of the person in that class of shares of the bank on the later of June 1, 1992 and the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister, and

    • (b) 10 percentage points in excess of the lowest significant interest of the person in that class of shares of the bank at any time after the later of June 1, 1992 and the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister.

  • Marginal note:Exception — eligible agent

    (3.1) If the person referred to in subsection (1) is an eligible agent or an entity controlled by an eligible agent, then the Minister may reduce the percentage referred to in subsection (2) or (3).

  • Marginal note:Exception

    (4) Subsection (1) does not apply if the purchase or other acquisition of shares or the acquisition of control referred to in that subsection would

    • (a) result in the acquisition of control of the bank by the person referred to in that subsection;

    • (b) if the person controls the bank but the voting rights attached to the aggregate of any voting shares of the bank beneficially owned by the person and by entities controlled by the person do not exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank, cause the voting rights attached to that aggregate to exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank;

    • (c) result in the acquisition of a significant interest in a class of shares of the bank by an entity controlled by the person and the acquisition of that investment is not exempted by the regulations; or

    • (d) result in an increase in a significant interest in a class of shares of the bank by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies, and the increase is not exempted by the regulations.

  • Marginal note:Regulations

    (5) The Governor in Council may make regulations

    • (a) exempting from the application of paragraph (4)(c) the acquisition of a significant interest in a class of shares of the bank by an entity controlled by the person; and

    • (b) exempting from the application of paragraph (4)(d) an increase in a significant interest in a class of shares of the bank by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies.

  • 1991, c. 46, s. 382
  • 2001, c. 9, s. 98
  • 2007, c. 6, s. 132
  • 2010, c. 12, s. 2063
  • 2012, c. 5, s. 23, c. 31, s. 111

Marginal note:When approval not required — federal credit union

  •  (1) Despite sections 373 and 379, the approval of the Minister is not required in respect of a federal credit union if a person with a significant interest in a class of shares, or in membership shares, of the federal credit union, or an entity controlled by a person with a significant interest in a class of shares, or in membership shares, of the federal credit union, purchases or otherwise acquires shares of that class, or membership shares, or acquires control of any entity that holds any share of that class, or any membership share, and the number of shares of that class, or the number of membership shares, purchased or otherwise acquired, or the acquisition of control of the entity, as the case may be, would not increase the significant interest of the person in that class of shares or in the membership shares of the federal credit union to a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever is applicable.

  • Marginal note:Percentage

    (2) Subject to subsection (3) and for the purpose of subsection (1), the percentage is 5 percentage points in excess of the significant interest of the person in that class of shares or in the membership shares of the federal credit union on the day of the most recent purchase or acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares, or of membership shares, of the federal credit union, or of control of an entity that held shares of that class of shares, or membership shares, of the federal credit union, for which approval was given by the Minister.

  • Marginal note:Percentage

    (3) If a person has a significant interest in a class of shares or in membership shares of a federal credit union and the person’s percentage of that class of shares, or of membership shares, has decreased after the date of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares, or of membership shares, of the federal credit union, or of control of an entity that held shares of that class of shares, or membership shares, as the case may be, of the federal credit union, for which approval was given by the Minister, the percentage for the purposes of subsection (1) is the percentage that is the lesser of

    • (a) 5 percentage points in excess of the significant interest of the person in that class of shares or in membership shares of the federal credit union on the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares, or of membership shares, of the federal credit union, or of control of an entity that held shares of that class of shares, or membership shares, of the federal credit union, for which approval was given by the Minister, and

    • (b) 10 percentage points in excess of the lowest significant interest of the person in that class of shares or in membership shares of the federal credit union at any time after the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares, or of membership shares, of the federal credit union, or of control of an entity that held shares of that class of shares, or membership shares, of the federal credit union, for which approval was given by the Minister.

  • Marginal note:Exception

    (4) Subsection (1) does not apply if the purchase or other acquisition of shares or membership shares or the acquisition of control referred to in that subsection would

    • (a) result in the acquisition of control of the federal credit union by the person referred to in that subsection;

    • (b) result in the acquisition of a significant interest in a class of shares, or in membership shares, of the federal credit union by an entity controlled by the person and the acquisition of that investment is not exempted by the regulations; or

    • (c) result in an increase in a significant interest in a class of shares, or in membership shares, of the federal credit union by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies, and the increase is not exempted by the regulations.

  • Marginal note:Regulations

    (5) The Governor in Council may make regulations

    • (a) exempting from the application of paragraph (4)(b) the acquisition of a significant interest in a class of shares, or in membership shares, of the federal credit union by an entity controlled by the person; and

    • (b) exempting from the application of paragraph (4)(c) an increase in a significant interest in a class of shares, or in membership shares, of the federal credit union by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies.

  • 2010, c. 12, s. 2064
 
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